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Trading and Programme Update

05 February 2010

Lipoxen plc (AIM: LPX), a bio-pharmaceutical company specialising in the development of high-value differentiated biologicals, vaccines and siRNA delivery, provides a trading update for the period ended 31 December 2009, prior to announcing its final results in April 2010.

Lipoxen reports that, due to a delay in the Phase II clinical trials for long-acting EPO and Insulin, the potential licensing revenues accompanying these candidates did not materialize in H2 2009 as originally expected; as a consequence the Company did not meet its revenue expectations for the second half of 2009.

While operating costs remained tightly controlled, the quantum of cost reduction was not enough to offset the level of revenue shortfall. As a result, the Company's net cash position of £1.02 million at 31 December 2009 was below management expectations. To this end Lipoxen will continue to review its cash requirements whilst pursuing revenue from licensing deals and other funding options.

Importantly Lipoxen has implemented a laboratory restructuring to move the Company's focus from a scientific research-driven and intellectual property company to one focused on maximising near term commercial opportunities in FY2010 for its platform technologies and lead projects. This has involved some staff changes, including the departure of Dr Peter Laing (former Chief Operating Officer of the Company's operating subsidiary, Lipoxen Technologies Limited). As announced in September 2009, the Company appointed Dr David Moss as Director of Projects to deliver on the Company's commercial objectives.

Lead Projects Update

ErepoXen
The Serum Institute of India ("Serum Institute"), Lipoxen's partner responsible for conducting its Phase II trial ErepoXen in India, has agreed to accelerate the product candidate towards marketability by expanding the planned trial into a fully integrated Phase II US FDA compliant trial. This has necessitated the engagement of a specialised Contract Research Organisation to carry out the multi-centre trial and new regulatory permissions. Although the project experienced an interim delay as a result, the required documentation has now been submitted to the Indian Regulatory Authority (DCGI) and Lipoxen expects to announce formal dosing of the first patient in Q1 of 2010.

The additional cost of the expanded Indian ErepoXen Phase II trial will be met by the Serum Institute. This however has culminated in the Serum Institute taking the decision that it is no longer in a position to fund the earlier stage ErepoXen Phase I trial in Canada, as previously agreed. As a result, the Canadian trial is on hold until Lipoxen concludes an alternative funding route.

SuliXen
FDS Pharma ("FDS"), Lipoxen's Russian counterparty responsible for the Company's Phase II Insulin trial of SuliXen in Russia, was unable to commence the trial at the end of 2009. In consultation with FDS, the Company is resetting the timelines for this trial with a view to initiating it in the first half of 2010.

Initial results from the Barbara Davis Institute study of SuliXen for Type 1 diabetes have indicated that this study will be extended through Q1 of 2010. While the Company initially expected to report on this study in Q4 of 2009, following the extension of the study, Lipoxen now anticipates being in a position to report in Q2 this year.

H1N1 Influenza Vaccine
As announced at the end of September 2009, Lipoxen has been appointed the lead member of the grant consortium to develop a novel H1N1 influenza vaccine. This programme is being funded by the UK Technology Strategy Board. While still at an early preclinical stage, this programme is progressing well and, when the latter stages of the programme have been successfully attained, Lipoxen expects to apply for further funding to move the vaccine candidate into the clinic within the next 12 months.

Baxter Healthcare
Lipoxen's Factor VIII project, which is partnered with Baxter, is progressing well and, as expected, the Company anticipates lead Product Candidate declaration in the first half of this year. Baxter is now the Company's third largest shareholder and sees the potential for broadening the collaboration this year.

HIV and Malaria Vaccine
The Company's HIV project, partnered with the world's leading HIV vaccine organization, International AIDS Vaccine Initiative, remains on track to report in Q1 of 2010 and Lipoxen's novel malaria project partnered with PATH Malaria Vaccine Initiative and the US NIH, is expected to report in the same time frame.

siRNA Delivery Project
Lipoxen's agreement, announced in June 2009, for its siRNAblate technology to evaluate the effectiveness of combining its partner's (currently undisclosed) proprietary siRNA with Lipoxen's platform technology, is progressing well and the Company will provide a further update in the near future.

Other Projects
The Company's collaboration with Pharmasynthez ZAO, announced in November 2009, to apply Lipoxen's ImuXen and PolyXen proprietary technologies to a broad range of six drug and vaccine candidates, is progressing well. This project will provide human proof of concept data on Lipoxen's vaccine platform technology as early as the end of this year.

Commenting on the trading update, M. Scott Maguire, CEO of Lipoxen, said: "We are delighted that the Serum Institute has decided to extend the Phase II ErepoXen trial in India to a fully compliant FDA trial. While incurring an initial delay, we are very pleased that the product will be accelerated to market.

"Following the recent restructuring, Lipoxen is better able to focus on delivering the near term commercial opportunities for its promising platform technologies. We therefore are confident of delivering value enhancing newsflow over the course of the next few months."

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